ETF Focus

Time to Flee Low-Vol ETF Strategy

Outperformance of such funds has been so dramatic that odds are against it continuing.

Steady-Eddie investors, it's time to review your favorite exchange-traded fund strategy: "low volatility." As of mid-2014, the idea of owning the market's most stable stocks, and only those stocks, has worked, even excelled. Investors have enjoyed a smoother ride than the S&P 500 and have beaten the index to boot. Now for the bad news: The factors behind this outperformance aren't sustainable.

One secret to the strategy's strong year is the bullish tone in the bond market, which, these days, is like a...